RAY DALIO: Everyone should have 5-10% in gold

Business Insider CEO Henry Blodget speaks with Ray Dalio, the founder of Bridgewater Associates, the world’s biggest hedge fund. Dalio discusses his assertion that most portfolios should have gold allocated at 5-10%, if for no other reason than it’s a great diversifying asset. Following is a transcript of the video.

Henry Blodget: You recommend that most portfolios should contain some gold.

Ray Dalio: Yeah, of course.

Blodget: Why? A lot of people think it’s not of course. In fact, it doesn’t make sense.

Dalio: Well, first of all, the best way to structure a portfolio is to have the right kind of balance in your portfolio, and some amount of gold. Gold serves a purpose. It is first of all, a diversifier against other assets. You know, we have this risk on, risk off thing. We also have a monetary system. The Bretton Woods monetary system began after World War II, and it had the dollar as the world’s reserve currency. There’s a risk there. There’s a lot of dollar denominated debt and so on. If somebody felt they didn’t want to hold that, and so you could have exposures to that.

So it’s a diversifying asset that is sensible, and that’s the main reason to have gold in the portfolio, five to 10%.